Herzog v. Irace

Gary G. Jones was injured in a motorcycle accident and engaged Anthony Irace and Donald Lowry (Irace) (defendants) to represent him in filing a personal injury claim in connection with this accident. While the claim was pending, Jones received medical treatment from Dr. John P. Herzog (plaintiff) for an unrelated injury. As he was unable to pay for the medical treatment, he signed a letter on June 14 stating that Dr. Herzog should be paid for his services from the settlement proceeds. Irace was informed by Herzog that Jones had assigned the proceeds of his settlement to Herzog to the extent necessary to pay for the medical services rendered. After receiving confirmation from Irace’s office that medical care rendered by Herzog to Jones could be paid from the settlement proceeds, Herzog proceeded to treat Jones, including performing surgery. Irace ultimately obtained a $20,000 settlement for Jones and Jones instructed Irace not to disburse funds to Herzog, claiming he would make the payment. Irace informed Herzog that Jones had withdrawn his permission to disburse funds to Herzog and proceeded to distribute the settlement funds to Jones and his other creditors. Herzog sued Irace in district court claiming that the assignment was enforceable against Irace. Irace defended that Jones had not relinquished all control, so the assignment was not effective, and enforcement would interfere with their ethical obligations to Jones. The district court found in favor of Herzog. Irace appealed to the Superior Court of Maine as an intermediate appellate court, which also found in favor of Herzog. Irace then appealed to the Supreme Judicial Court of Maine.